Income Taxes in Greece

Income Taxes in Greece for Expats and Foreigners

Table of Contents

Income Taxes for Foreigners

In this article, our aim is to provide a comprehensive overview of the various tax categories applicable if you decide to make Greece your residence. Regardless of your legal status in Greece, as an expat you will be subject to four primary types of taxation: income, capital gains, social security, and value added taxes. 

Each category will be explained separately, including information on when you may be eligible for tax exemptions. Our goal is to enhance the quality of the writing, optimizing word choice, structure, readability, and eloquence while preserving the original meaning.

Income taxes in Greece for Expats

AFM – Greek Tax Number 

No matter what type of visa or resident status you hold in Greece, you are required to pay taxes on all income, whether it’s from local or foreign sources.

However, there are some cases where tax exemptions apply, as discussed in the section below. Therefore, if you decide to relocate to Greece, it is necessary to obtain a Greek tax number, officially known as AFM.

You can apply for the tax number upon your arrival in Greece or even before leaving your home country. If you are already in Greece, it is advisable to visit the nearest office of the Internal Revenue Service and consider going with an interpreter.

If you prefer to obtain a tax number before arriving in the country, you can apply on the official website of the IRS. Keep in mind that the website is only available in Greek. Alternatively, if you are unable to speak the language or do not have anyone to assist with translation, you can visit your nearest Greek Consulate. They will be able to answer all your questions and guide you through the application process.

Exemptions and Deductions

Before delving into the specifics of each tax category, let’s take a moment to explore the circumstances that may qualify you for deductions or even exemption from taxation altogether. Initially, it’s important to note that your foreign income will remain untaxed and need not be declared if your stay in the country is less than six months per year.

Additionally, you can avail yourself of tax deductions of up to 15% if you meet the following criteria:

  • Mandatory contributions to social security
  • Mortgage payments for your first property in Greece
  • Charitable donations to medical, educational, or religious institutions within the country
  • Full payment of rent for your Greek residential property
 

Moreover, certain sources of income are completely tax-free, including:

  • International shipment of commodities
  • Capital gains resulting from the transfer of business entities between yourself and family members in Greece
  • Sales and dividends from the Athens Stock Exchange
  • Dividends earned from officially registered enterprises in the country.
 

Double Taxation Treaty

Furthermore, you can take advantage of the double tax agreement that Greece has entered into with nearly sixty countries worldwide, including the United States, China and the United Kingdom. Essentially, this treaty states that if you are a citizen of one of the countries on the list, you will only be liable to pay taxes in either Greece or your home country.

This agreement encompasses various types of taxes, such as income, capital gains, and certain withholding taxes. To determine whether you are required to pay taxes in Greece or your home country, it is advisable to consult with your lawyer or the Greek Internal Revenue Service.

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Greek Income Taxes

This tax essentially hinges on whether you earn income as an employee or a business entity. In the case of the former, the IRS utilizes a progressive taxation system. The choice between these two options determines the tax implications.

Personal Income Tax

If you are employed in a formal capacity, the amount of tax you are required to pay will be determined by your monthly salary. However, if you earn less than 12,000 euros per month, you will be exempt from taxation entirely. Otherwise, your income tax will be calculated as follows:

Salary (in euros per month)

Tax

12,000 or less

not applicable

12,000–16,000

18%

16,000–22,000

24%

22,000–26,000

26%

26,000–32,000

32%

32,000–40,000

36%

40,000–60,000

38%

60,000–100,000

40%

100,000 and above

45%

Tax Reductions for Remote Workers

In alignment with the ongoing global trend of embracing digital nomads, Greece has taken a significant step by offering a 50% reduction in income tax for individuals falling into this category. This presents a remarkable opportunity worth considering, provided one can generate income remotely.

Greece Digital Nomad Income taxes in Greece for Expats

To avail of this benefit, one simply needs to secure a digital nomad visa and commit to a minimum two-year stay in Greece. This entitles individuals to enjoy an income tax rate that is half of what is depicted in the aforementioned table. Moreover, this reduction can be sustained for up to seven consecutive years, subject to one’s unique circumstances.

It is worth noting that if one becomes a tax resident in Greece and invests 500,000 euros in the national economy, their foreign income tax liability will be fixed at 100,000 euros annually, regardless of their actual income.

Corporate Income Tax

On the flip side, corporate income tax in Greece is not progressive, but rather set at a flat rate of 22%, regardless of the organizational structure of the enterprise. However, certain legal entities, like banks and other financial institutions, are subject to a 29% tax rate. It is advisable to consult with your lawyer to ascertain the exact rate applicable to your specific enterprise.

Moreover, the Greek Internal Revenue Service considers corporate capital gains as regular income, with a maximum payable rate of 22%. Interestingly, the national average corporate CGT stands at a mere 15%. This grants Greece a distinct advantage over many other member states of the EU, where the capital gains tax for legal entities ranges from 19% to 34%. Only a handful of countries set it at less than

Rental Income Tax

Rental income tax is a frequently encountered form of taxation for foreigners in Greece. Investing in the Greek real estate market and subsequently renting out the acquired property has become a highly favored method for obtaining permanent residence status in the EU. The tax itself follows a progressive structure, with the breakdown as follows:

Tax Rate (in %)

Rental Price (in euros per year)

15%

12,000 or less

35% (of the amount above 12,000)

Up to 35,000

45% (of the amount above 35,000)

35,001 and higher

Social Security Tax

In, both employers and employees are required to make social security contributions. The contributions are calculated as follows:

  • Employees contribute 15.5% of their monthly salary.
  • Employers contribute 24.56% of the monthly salary.

However, the actual amount may vary depending on the employee’s social security fund. In some cases, the contribution rates can be reduced to 14.12% for employees and 22.54% for employers.

These contributions go towards medical insurance, pension funds, and unemployment benefits.

It’s important to note that US citizens are only obligated to make social security contributions in either the United States or Greece, based on the Double Taxation Treaty signed between the two countries.

VAT

The Greek government appears to place significant importance on value-added tax, a different form of taxation. Generally, it can be understood as follows:

Super-Reduced VAT

  • 6%

 Bookshops, Theaters, printed media

Reduced VAT

  • 13%

Catering and tourist industry, street vendors, medical services

Standard VAT

  • 24%

Other commodities and services

Tax Payment Schedule

Below is the schedule payment schedule set by the Greek Internal Revenue Service: 

Income Taxes

Once every year

VAT

Once every four months

Social Security Tax

Once every month

 

Final Thoughts

In this article, we have explored the main categories of income tax that apply to foreigners in Greece. However, it is important to note that the Greek taxation system is highly complex and can often be perplexing. The specific details of your individual tax plan will also be influenced by your unique financial, legal, and employment circumstances.

Furthermore, Greek laws are subject to frequent changes, with new amendments and revisions being issued regularly. Therefore, we recommend that you view our article as a general overview of the topic, and we encourage you to consult with your lawyer or relevant authorities for the most up-to-date and specific information to help you devise the optimal taxation strategy for your individual business needs.

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